Automated and Manual Signals

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Background

The Forex market has more losers than winners. Approximately 90% of its retail participants serially lose and end up calling it a day. And after they do, the only story they often have to tell is that of pain, misery, and even, for some unlucky ones, poverty.

It is not unusual to find erstwhile Forex traders who decided to leave the game because they were just suffering massive, uncontrollable losses. These people, originally attracted by campaigns about Forex market as the ultimate solution to their financial woes, were rather disappointed.

However, the good news is: you do not have to become one of them. And you will not if you are patient enough to learn about some of the tools available to turn the odds in your favor. One of such tools is signals.

Introducing Forex Signals

There is nothing complicated about Forex signals. They are simply recommendations made by expert traders and analysts to help other traders improve their odds. Some of those people derive their incentives for providing signals in the form of fees. Others, instead, are incentivized to provide those signals just to build loyal customer bases to which they can market their other products such as courses.

Besides, Forex signals can also be derived from software or other programs. In this instance, they are developed from the analyses of historical price movements which the software uses to recognize future directions of the market. The software employed in the generation of this type of signals is based on technical indicators such as the Relative Strength Index (RSI) and Moving Averages, etc.

Based on the difference in the agents that generate them, Forex signals can, therefore, either be manual or automated.

Manual or Automated Signals?

The choice between manual or automated Forex signals can be confusing. However, you need to know some basic differences between them. While automated signals can be issued by brokers offering social trading networks (e.g. eToro and ZuluTrade), manual signals are provided via social networks such as Facebook, Twitter, and even LinkedIn.

Besides, you can also have access to automated signals by purchasing robots. Social/Copy Trading is a form of semi-automated signal service that enables you, as its name implies, to copy the trades of profitable traders. Importantly, there are many options available to you and the choice depends on your situation and needs.

Advantages of Manual and Automated Signals

Both manual and automated signals have their pros and cons. Some benefits of manual signals are:

  • Manual signals are readily available: If you pick 10 Forex signals, chances are that more than 5 of them are manual. Perhaps, one reason for their popularity is the fact that they do not take control of their users’ accounts from them. Also, most of the learning materials about signals on the internet are built around them.

  • They allow you to adjust your risk level: Risks change with changing market conditions. Manual signals are highly adaptable as they allow their users to adjust to market fluctuations. Based on market conditions, manual signal provider can choose to extend the take-profit price or shorten the initially recommended stop loss.

  • They do not totally eliminate emotions: As demonised as emotions have become in Forex trading, you need them sometimes. This is where completely automated signals fail. In actual fact, the market is a cluster of human emotions — ranging from greed to fear. Consequently, manual signals can help you exploit this fact to take advantage of highly profitable opportunities in the market.

The presence of human emotions in them also ensure that they are flexible enough to, for example, factor in fundamental analysis as evident in news trading.

However, the cons of manual signals include the facts that they are time-consuming, usually track just a few currency pairs, and often result in a lot of missed trades.

Then to automated signals whose major advantages include:

  • Automated signals are more suitable for newbies: Newbie traders are often clueless and tend to make fatal mistakes that can essentially cut short their trading career. For this reason, automated signals are better for them. With automated signals, a beginner trader can rapidly grow his trading capital without even lifting a finger.

  • They can help to protect against the risks of emotional trading: Automated signals are generated by robots. Human emotions do not have a say in the matter. As a result of that, they help to reduce the many risks associated with emotional trading.

  • They can be used to backtest trading strategies: Backtesting is a method of ascertaining the winning rate of trading strategies. While it can be done also with manual signals, backtesting trading strategies using automated signals often evokes more confidence and enthusiasm in signal users.

  • Automated signals are fast and versatile: Automated signals are quickly executed, faster than any human ever can. This means that fewer trades are missed and trading conditions are always at an optimal level. Also, they cover more currency pairs and asset classes than their manual counterparts do.

  • They are time-saving: Automated signals completely eliminate a lot of drudgery from Forex trading. In addition to helping to reduce time devoted to analysis, they also handle every other hard work.

Still, automated signals are not without their faults. They are not as flexible as manual signals and they can yield erratic results in highly-volatile market conditions. Nevertheless, whichever you choose between automated signals and their manual counterpart, 1000pipBuilder is one signal server that can give you the best of either. You should sign up for an account with them here.

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